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While national new home building activity remains very strong, the HIA has warned the sector faces “unprecedented uncertainty” in coming years.
The latest HIA National Outlook — released last week — highlights the vital economic role that new housing activity continues to play, but also recognises the unprecedented uncertainty facing the new home construction outlook.
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Housing Industry Association chief economist, Dr Harley Dale, says the current new home building boom is unlike any other that has come before it.
“It is the longest and largest in Australia’s history and has provided an unprecedented economic boost to the nation, without which domestic demand would be in or close to recession,” Dr Dale said.
“This cycle is marked by substantial regional divergences in the levels of activity in various markets around the country; and the mix of dwelling types being built has changed dramatically. As the down cycle in new home building unfolds, the record pipeline of medium/high-density dwellings in particular creates considerable uncertainty as to the timing and magnitude of the decline in construction.”
HIA’s forecasts are for a peak of over 232,500 new dwelling commencements to have been reached in 2015/16, which will be followed by three consecutive years of decline.
New dwelling commencements are forecast to bottom out at a level of around 166,500 in 2018/19, but there is downside risk to this forecast under current economic and political settings.
“Just as new home building activity seems to be reaching its peak, the recovery in the home renovations market has started to gather pace,” Dr Dale noted.
“National renovations investment got off to a great start in 2016, growing by 2.2 per cent in the March quarter. HIA expects that renovations activity grew by 4.2 per cent in 2015/16 – the fastest rate of increase in over a decade. Further growth over subsequent years is forecast to take renovations activity to a value of nearly $33.2 billion by 2018/19.”
